August 13, 2025

MEMO: Tax Credits Soon to Expire: What to Know

TO: Interested Parties

FROM: Rep. Lou Correa (CA-46)

DATE: August 13, 2025

RE: Tax Credits Soon to Expire: What to Know

Thanks to clean energy tax credits, thousands of Americans have been able to save their money and protect the planet by investing in solar panels, hybrid cars, and more. But the Republican tax bill is removing many of these credits, meaning it's about to cost a lot more for families to install and use sustainable energy and fuel options. The following tax credits are set to expire after the passage of the H.R. 1 – the “One Big Beautiful Bill”. See below for information on how to take advantage of these credits before they expire.

TAX CREDITS TO VEHICLES

Purchasing New Electric Vehicle (EV) and Hybrid Vehicles

  • About the Credit: The up to $7,500 credit for purchasing new EV and hybrid vehicles can be used for individuals and businesses who purchase the vehicles for their own use (not for resale) and use the vehicle primarily in the U.S. Also, modified adjusted gross income (AGI) may not exceed:

    • $300,000 for married couples filing jointly or a surviving spouse

    • $225,000 for heads of households

    • $150,000 for all other filers

  • Deadline: September 30, 2025

  • How to Claim: File Form 8936, Clean Vehicle Credits with your tax return. You will need to provide your vehicle's VIN.

  • More Information: Visit here.

Pre-owned EV and Hybrid Vehicles

  • About the Credit: The credit can be applied for purchases of qualifying pre-owned EV and hybrid vehicles from a licensed dealer for $25,000 or less. The credit equals 30% of the sale price up to a maximum credit of $4,000.

  • Deadline: September 30, 2025

  • How to Claim: You can apply the Clean Vehicle Tax Credit immediately toward the amount you pay for the vehicle by transferring the credit to the dealer or you can wait and claim the credit when you file your tax return. To transfer the credit at the time of sale, you must buy the vehicle from a registered dealer primarily for personal use (not for resale). You must file Form 8936 when you file your tax return for the year in which you take delivery of the vehicle.

  • More Information: Visit here.

TAX CREDITS FOR HOME IMPROVEMENTS 

Energy Efficient Home Improvement Credit

  • About the Credit: The Energy Efficient Home Improvement Credit provides a tax credit for up to $3,200 for qualifying home improvements that increase energy efficiency such as more energy efficient widows, heat pumps, and insulation. The maximum credit that can be claimed each year is:

    • $1,200 for energy efficient property costs and certain energy efficient home improvements, with limits on exterior doors ($250 per door and $500 total), exterior windows and skylights ($600) and home energy audits ($150)

    • $2,000 per year for qualified heat pumps, water heaters, biomass stoves or biomass boilers

  • Deadline: Improvements must be installed by December 31, 2025.

  • How to Claim: File Form 5695, Residential Energy Credits Part II, with your tax return to claim the credit. You must claim the credit for the tax year when the property is installed, not merely purchased.

  • More Information: Visit here.

Residential Clean Energy Credit

  • About the Credit: This credit can be used when making renewable energy improvements to the home (whether you own or rent it), such as solar panels, wind turbines, geothermal heat pumps, or battery storage technology. The credit equals 30% of the costs of new, qualified projects.

  • Deadline: Improvements must be installed by December 31, 2025.

  • How to Claim: File Form 5695, Residential Energy Credits with your tax return to claim the credit. You must claim the credit for the tax year when the property is installed, not merely purchased.

  • More Information: Visit here.